Top Public Policy Issues Facing Governing Boards in 2025–2026:
Accountability and Regulation

June 26, 2025 Update

In a significant development, the Senate Committee on Health, Education, Labor, and Pensions (HELP) released its version of the budget reconciliation bill. Unlike the House proposal, the Senate version does not include the controversial “risk-sharing” provision, which would hold institutions financially responsible when students struggle to repay loans. However, the Senate version does include a new programmatic accountability measure based on former students’ earnings. Specifically, the legislation would evaluate undergraduate programs by comparing their graduates’ earnings with the median earnings of young adults who hold only a high school diploma. For graduate and professional programs, the benchmark shifts to the median income of bachelor’s degree holders. This signals a continued federal interest in tying program value to economic outcomes, an approach that could influence how institutions structure programs and communicate their value proposition to students.

May 27, 2025 Update

In a razor-thin margin, the U.S. House of Representatives passed the House GOP’s budget reconciliation bill by a vote of 215–214. This sweeping legislation signals a renewed push by House Republicans to realign federal priorities, including significant implications for regulatory oversight in higher education. The bill now moves to the Senate.

In a significant judicial intervention, a federal district judge issued a preliminary injunction blocking the implementation of President Trump’s Executive Order aimed at dismantling the U.S. Department of Education. The judge halted the administration’s reduction-in-force plan targeting nearly 50 percent of department staff, ordered the immediate reinstatement of affected employees, and enjoined the administration from shifting the management of key functions such as federal student loans and special education programs to other federal agencies.

May 15, 2025 Update

The House Committee on Education and the Workforce has passed the Student Success and Taxpayer Savings Plan, a reconciliation bill introducing significant changes to federal student aid. Key provisions include implementing a risk-sharing program that holds colleges financially responsible for a portion of unpaid student loans. The bill also proposes creating new caps on federal student loans for both undergraduates and graduates, eliminating the Saving on a Valuable Education (SAVE) repayment plan, and consolidating repayment options. Regarding Pell Grant eligibility, the bill would require students to be enrolled at least half-time and would redefine full-time enrollment as 30 credit hours per year (up from 24 credit hours).  

Published March 28, 2025

The president’s executive order to dismantle diversity, equity, and inclusion (DEI) programs across the federal government also brought pressure on corporations, foundations, and universities to dismantle their DEI programs. The executive order on “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” instructed the Justice Department to identify and investigate nine targeted groups to determine whether their DEI policies and practices violate civil rights laws. The 143 colleges and universities with endowments over $1 billion were among the potential targets. Conservative activist Christopher Rufo, a key figure in shaping Florida Governor Ron DeSantis’s policies on education and social issues, tweeted afterward: “Dear Ivy League universities, you are officially on notice. … Abolish DEI, or get wrecked.”¹ The American Association of University Professors and others sued to stop the president’s DEI order.²

On the campaign trail, the president proposed firing accrediting agencies he argued contributed to ideological bias in U.S. colleges and universities.³ By law, colleges and universities that receive federal grants and student aid must hold accreditation from an independent, non-governmental accrediting agency recognized by the U.S. Department of Education. In 2019 the department dropped a requirement that colleges gain accreditation from their regional accreditation agency and opened the system up to ones operating nationally. Accreditation had already become a point of contention in Florida, where Governor Ron DeSantis objected to questions raised by the Southern Association of Colleges and Schools (SACS) regarding his policies and appointments. While DeSantis lost a lawsuit claiming the accreditation system was unconstitutional, in 2022 the Florida Legislature enacted his plan requiring state colleges to change accreditors every cycle, customarily five to ten years; North Carolina followed suit. SACS President Belle Whelan told Inside Higher Ed, “There’s always been some legislative interference in higher ed. But rarely was that interference concerning academic freedom. Things are different now, and they are much more invasive.”⁴

There are dozens of approved agencies for accreditation, many for single disciplines but also large regional ones that formerly had some exclusivity overseeing the combination of self-study and peer review by outside educators that determines whether the institution merits accreditation and can receive federal grants and student aid. Robert Shireman, a deputy undersecretary of education in the Obama Administration and senior fellow at the liberal Century Foundation, argued in a column that these independent review agencies are an important bulwark of academic freedom. “American colleges and universities have, over the years, felt enormous pressure from politicians, religious leaders, social organizations, and even some offices and factions inside the academies themselves to change curricula, prohibit or pursue certain fields of study, fire or hire faculty, or make changes in governance structures,” he wrote. “All of these attempts to pressure colleges and universities threaten academic freedom, a bedrock principle of American higher education.”⁵

There has been an ideological tug of war between U.S. presidents of different parties on Title IX of the Education Amendments of 1972, which prohibits sex discrimination in federally assisted educational programs and activities and is enforced by the U.S. Department of Education’s Office for Civil Rights. During the president’s first administration, he spent three years revising the Obama Administration’s Title IX regulations, rewriting them to expand the rights of those accused of sexual harassment or assault, including allowing cross-examination of accusers. Those rules ran to more than 2,000 pages. In turn, the Biden Administration spent three years and took 1,533 pages to rewrite the Title IX rules to protect LGBTQ students. The president overturned that provision by executive order on his first day back in the Oval Office.

Lawsuits brought by 26 Republican attorneys general had blocked implementation of Biden’s Title IX rules and in his final days in office Biden gave up an attempt to use Title IX to allow transgender athletes to participate in teams consistent with the gender identity. That controversial Title IX proposal had garnered over 150,000 public comments.⁶ His Education Department also dropped proposed rules to rescind regulations on “Religious Liberty and Free Inquiry” and to allow the secretary to waive all or part of student debts and to waive loan repayment for borrowers experiencing a hardship. During the 2024 campaign, the president and the GOP highlighted Democrats’ support for transgender rights as a key issue. In the aftermath, Democratic attorneys general are pursuing legal challenges to his administration’s policies and initiatives.

New rules aimed at tightening research security and limiting partnerships with Chinese institutions and scholars have placed additional requirements on research institutions.

Republicans have sought to dismantle the U.S. Department of Education since the day of its creation and the president brought renewed determination to doing so. While there had been a federal education office dating back to 1867, it has only been a Cabinet department since President Jimmy Carter, fulfilling a promise to teachers’ unions, carved it out of the old Department of Health, Education, and Welfare in 1979. President Ronald Reagan immediately tried to shut it down, but it survived after a blue-ribbon panel produced the “A Nation at Risk” report that raised concerns about the quality of K-12 U.S. schools. The president made no move to dismantle the department in his first term but now has vowed to shut it down while transferring essential functions such as subsidizing college loans and awarding Pell Grants to other parts of the government.

On March 20, 2025, the president issued an executive order directing U.S. Secretary of Education Linda McMahon to, “take all necessary steps to facilitate the closure of the Department of Education and return authority over education to the States and local communities.”⁷ The next day, the president also announced plans to transfer the department’s responsibility for administering federal student loans to the Small Business Administration,⁸ but the executive order and the president’s plans are expected to face judicial challenges and legislative hurdles.⁹ Even if the courts and Congress preserve the department, its operations face significant strain due to significant staffing cuts.

One of the Education Department’s principal duties affecting colleges is administering the Free Application for Federal Student Aid (FAFSA), which encountered significant challenges in 2023 following changes intended to simplify the process for families. As a result, delays in the revision process left many colleges unable to determine students’ financial aid eligibility in time for admission offers. “The rollout faced delays and technical issues from the very beginning,” the U.S. Government Accountability Office wrote. Typically, high school seniors and collegians can apply for FAFSA on October 1 each year. But the form wasn’t available until December 30, 2023, for the 2024–2025 year, and the department answered barely a quarter of the 5.4 million calls confused parents and students made for help. Delays, glitches, and other issues led to a 9 percent decline in FAFSA applications and a sizable drop in Pell Grant awards. The timing was especially challenging for institutions worried about meeting enrollment goals. And the Congressional Budget Office projected a $2.7 billion shortfall in funding of the Pell Grant program for fiscal 2026.¹⁰ Colleges and universities can expect ongoing FAFSA issues due to staff reductions in the student aid office at the Education Department, which could limit oversight of contractors managing FAFSA operations.

The new administration might also consider several regulatory changes to the federal student aid program. The one of most concern to higher education is the possibility for “risk-sharing” by colleges and universities if they wish to continue participating in the federal student loan program. Risk-sharing essentially demands that colleges and universities share in the financial liability for the cost of student loan defaults, and it would require many institutions to make annual payments to the federal government for a portion of their defaulted loans. Another possibility is repealing the Biden Administration’s “borrower defense” rule, which allowed students to have loans forgiven if colleges engaged in certain types of misconduct. The Supreme Court in January 2025 agreed to review the borrower defense rule that a lower court had blocked.¹¹ Staff reductions in the Education Department might hinder the ability of the department to oversee the various loan-services companies that assist borrowers with the repayment of their student loans.